MANHASSET, N.Y. A rise in demand for engineers for temporary work assignments and a small increase in hiring for permanent positions reported by U.S. staffing firms point to the beginning of a recovery for both the electronics industry and the national economy.
With so many engineers left jobless by corporate layoffs, however, there still is not enough demand to take care of all unemployed engineers.
"After a terrible 2001 and pretty brutal first quarter when there were few assignments for contract workers, demand for engineers picked up at the end of February and increased through March," said Paul Casaceli, director of technical staffing at engineering services firm Trialon Corp. (Troy, Mich.). Trialon employs about 100 engineers on contract assignments nationwide.
Electronics companies appear to be hiring temporary workers to boost their staffing to keep up with increases in business that began in March, something businesses typically do to adjust to changes in the economy.
That tendency is fueling a pickup in "the contract temporary-hires market across the board, and especially in technical areas (e.g., EEs) where manufacturing and technical companies are starting to use contract employees again," said Scott Sargis, managing director of Strategic Search Corp. (Chicago). Strategic Search places engineers and other technical professionals and executives in R&D organizations.
Sargis called the return of contract workers the "first step" in the recovery process after a downturn.
First fired, first hired
Temporary workers are often the first fired when companies cut costs, but also they're the first hired when a recovery begins. At that point, companies need to boost staffing levels but aren't yet ready to commit to permanent employees.
"Historically, temporary staffing improves as the economy starts to turn up. It's sometimes viewed as an audition for both the employer and employee that could lead to a permanent situation if business improves," explained a spokeswoman from the American Staffing Association (ASA; Washington).
At Trialon, the outlook for engineering work changed in late February and March, as companies in segments such as telematics and telecommunications began looking for EEs to work on a contract basis, according to Casaceli. Those industries currently need EEs with experience in embedded systems, controls, electronic design automation and circuit design, wireless communications, navigation systems and telematics.
Stories like those from Trialon and others lead staffing firms to look forward to better times in 2002. While there are no numbers to support the expanded demand cited by some staffing companies, the ASA spokeswoman said the association's members are "poised for growth" and expect an upturn in the third and fourth quarters.
In addition to increases in temporary placement, staffing firms said the hiring freeze in place since Sept. 11 is thawing and companies are sending them requests for permanent employees.
That's the case with Strategic Search, which did not see any openings for permanent positions until March, when it began receiving inquiries from employers "selectively looking for situations," Sargis said.
The increased demand for contract and permanent workers, while not a full-fledged stream, is at least a trickle and is good news for U.S. staffing companies dealt a blow by the high-tech slump.
Demand for contract employees "declined 14 percent in 2001 to make last year one of the toughest years on record for the industry," according to an American Staffing Association report. On average last year, the ASA said 2.18 million temporary and contract employees worked for U.S. staffing firms in 2001, down from 2.54 million in 2000.
Firms that deal with permanent staffing also took a hit. The drop in hiring meant many small employment firms had to close up shop and large ones were forced to lay off employees. Business slowed and then dropped for Strategic Search after Sept. 11, but Sargis said that they were able to stay in business by being "nimble enough to take advantage of the jump in demand for security software talent after the terrorist attacks."
While demand for contract workers may be rising, so is the supply of contract workers. After losing their jobs in layoffs last year, many engineers who have been unable to find permanent positions have been forced to become independent contractors.
Casaceli of Trialon said there is "quite an influx of new blood" looking for contract work since the last quarter of 2001, which makes it easier for firms like Trialon and its clients to find good, qualified people.
The situation is reminiscent of the mid-1990s, when employers had the upper hand and could be "pretty picky" about whom they hired, Casaceli said, adding, "if they're good, engineers will always have a job."
Engineers who are thrust into contract work because of a layoff often find that their skills and experience are not as marketable in the contract employment arena.
Those with leading-edge skills and knowledge are in greatest demand, while those who have been in manufacturing, production or fields that aren't as leading edge have a hard time finding contract assignments, according to Casaceli.
One engineer who contacted EE Times said he has been finding employment as a contract worker since Polaroid laid him off two and a half years ago, but hasn't had a decent assignment since Sept. 11.
A longtime employee in Polaroid's ID group who focused on electronic imaging said he is teaching himself Verilog to make himself more marketable, but finds most employers want people with experience. While he searches for a new engineering assignment, he is substitute-teaching in his hometown to make ends meet.
Many engineers seeking work may find themselves in the same position. While there is a slight upswing in hiring, companies are still running lean, offering positions in critical positions only. When openings do occur, companies want someone with the exact experience, Casaceli noted.